By: Richard L. Smith
On Monday, Attorney General Matthew J. Platkin joined the lawsuit previously filed by the U.S. Department of Justice and the Attorneys General of California, Maryland, Massachusetts, New York, North Carolina, and the District of Columbia against JetBlue Airways and Spirit Airlines challenging JetBlue's proposed acquisition of Spirit.
They allege the purchase would substantially lessen competition in the industry and violate the federal Clayton Act.
According to the AG's Office, JetBlue won a bidding war last year to acquire Spirit in a deal worth $3.8 billion.
If the deal were to go through, the plaintiffs allege, JetBlue would eliminate a unique disrupter in the airline industry that forced other airlines, like JetBlue, to cut fares and offer deals to keep up.
Traveler demand for Spirit's low unbundled fares and unique model has led to explosive growth; the airline is six times more prominent today than it was in 2010.
Spirit is described as the largest ultra-low-cost carrier, and its business model has allowed it to offer some of the lowest fares in the industry.
Like Spirit, JetBlue initially started as a low-cost carrier, but as its market share has grown, it has aligned its practices with larger airlines and has raised fares.
If the acquisition is completed, more than 150 routes would be affected by the elimination of Spirit, and it would allow the combined entity to control 50% to 90% of some markets. At airports operated by the Port Authority of New York and New Jersey, that number could be approximately 20%.
Today, Spirit serves as JetBlue's only competitor in specific markets.
"Everyone knows how expensive airfare already is, and airlines like Spirit create important competition in the industry by offering passengers a less expensive option when they have to fly," said Attorney General Platkin.
"JetBlue does not want to buy Spirit to improve its service or to offer lower fares. It wants to eliminate competition, grow its market share, and create monopolies in regions nationwide. We will always fight for our consumers — especially when companies limit customer options to boost their bottom line or expand their influence over an industry."
JetBlue controls approximately 5.4% of the domestic airline market, while Spirit controls 4.9%. However, each airline owns roughly twenty percent of the domestic market, not dominated by the "Big Four" airlines, United Airlines, American Airlines, Delta Air Lines, and Southwest Airlines.
If this merger succeeds, the combined entity would control approximately 40% of the remaining market not dominated by the Big Four. The plaintiffs allege there are no possibilities of new carriers entering or expanding enough to offset or deter the acquisition's anticompetitive effects.
In New Jersey, nearly 24,000 residents are employed by the airline industry, which services 23.3 million passengers and over 530,000 flights per year. A vast majority of those flights depart from and arrive at Newark Liberty International Airport.
Both JetBlue and Spirit fly in and out of Newark Liberty. In 2022, JetBlue passengers accounted for 6.4% of all passengers at the airport, while Spirit accounted for 5.8%. A merger could mean JetBlue controlling more than 12% of passengers in and out of Newark Liberty.
The plaintiffs seek to prevent further harm against the competition in the airline industry by asking the court to find that JetBlue violated the Clayton Act and to restrain the company from carrying out the acquisition of Spirit in any form.